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ITA
Tax Cap Ordinance

The following is the actual revenue
cap ordinance passed in 1996 by the Fairbanks North Star Borough, a
second class borough. A few improvements were incorporated that year to
tighten it, but it is very similar to the very first one, which
Fairbanksans had been re-enacting every two years in order to keep it in
force and unchangeable. (Voter approved initiatives in Alaska are
automatically protected from change for two years.) A later version added
wording to require use of the Fairbanks CPI, allowing the Anchorage CPI to
be used until such time as there was a Fairbanks CPI.

If you are looking at
this type of thing for your city, remember that this one is only for a
second class borough. Follow this link for the link for the Fairbanks City Tax Cap (Fairbanks is a first class home rule municipality).
If, after reading this, you are confused, try our brief explanation.

SUMMARY OF ORDINANCE TO BE ENACTED

ORDINANCE ESTABLISHING MAXIMUM ALLOWABLE TAX REVENUES

"SHALL SECTIONS 3.08.141 AND 3.08.142 OF THE FAIRBANKS NORTH
STAR BOROUGH CODE OF ORDINANCES BE ENACTED AS FOLLOWS? THESE SECTIONS WILL PROVIDE FOR
LIMITATIONS ON THE MAXIMUM ALLOWABLE TAX REVENUES FOR THE FAIRBANKS NORTH STAR BOROUGH.
UNDER SECTION 3.08.141 THE BOROUGH WILL BE ABLE TO LEVY OR IMPOSE ONLY THE SAME
AMOUNT OF TAXES FOR ONE FISCAL YEAR AS THE BOROUGH LEVIED OR IMPOSED FOR THE PRECEDING
YEAR, EXCEPT THAT THE BOROUGH CAN INCREASE THE AMOUNT OF TAXES LEVIED OR IMPOSED (a) TO
ADJUST FOR INFLATION: (b) TO TAKE INTO ACCOUNT NEW BUILDINGS AND LAND COMING ONTO THE TAX
ROLLS; (c) MAKE NEW PAYMENTS ON BONDS; (d) PAY FOR SERVICES APPROVED BY VOTERS; (e) PAY
FOR NEW LEGAL JUDGMENTS ENTERED AGAINST THE BOROUGH; AND T0 PAY FOR EXPENSES IN
EMERGENCIES. SECTION 3.08.142 PROVIDES A FORMULA AND DEFINITIONS FOR THE LIMITATIONS OF
SECTION 3.08.141."

Chapter 3.08

ORDINANCE ESTABLISHING MAXIMUM ALLOWABLE TAX REVENUES

Sections:

3.08.141 Total amount of borough tax that can be levied or imposed.

3.08.142 Computation of maximum allowable tax revenues.

3.08.141 Total amount of borough tax that can be levied or imposed:

A. Except as provided in this section, the total amount of municipal tax that
can be levied or imposed during a fiscal year shall not exceed the total amount approved
by the borough assembly for the preceding year by more than a percentage determined by
adding the percentage increase in the Federal Consumer Price Index for Anchorage from the
preceding fiscal year.

B. The limitations set forth in subsection A do not apply to the following:

1. Tax on new construction or property improvements which occur
during the current fiscal year;

2. Any appropriation made to pay or secure payment of principal
and/or interest on bonds;

4. Funding of new judgments entered against the Fairbanks North
Star Borough;

5. Special appropriations necessary on an emergency basis to fund
unavoidable expenses insuring the public peace, health or safety.

C. The Borough Assembly shall use the formula and definitions for
computation of the total amount of borough tax that can be levied or imposed by applying
the provisions of FNSB 3.08.142 and shall, by May 31 of each fiscal year, publish its
calculations showing these computations for each taxing jurisdiction.

3.08.142 Computation of maximum allowable tax revenues:

The maximum tax revenue allowed under FNSB 3.08.141 is computed
for the next fiscal year as follows:

1. "A" equals the amount of tax revenue derived from actual taxes
levied on taxable real property in each taxing jurisdiction in the current fiscal year and
all other tax revenues;

2. "B" equals the amount of the actual payment of principal and
interest on bonds made in the current fiscal year, less actual state reimbursement for
school construction debt;

3. "D" is product of the percentage change in the
Consumer Price Index for All Urban Consumers (CPI-U) for Anchorage, Alaska during the prior fiscal
year (CPI) and the net taxes levied (A-B) in the current fiscal;

4. "F" equals the total amount of all exclusions under
FNSB 3.08.141B, and is the sum of all the following:

F.1 The taxes on new construction or property improvements
equals the projected tax revenue from the value of that new construction or property
improvements1 computed by multiplying the tax rate applied to properties in that taxing
jurisdiction during the current fiscal year by the assessed value of the new construction
and property improvements;

F.2 The principal and interest due in the next fiscal year on
bonds, less state reimbursement for school construction debt, plus any over-adjustment or
under-adjustment to actual reimbursement from the current year;

F.3 Taxes to provide voter-approved services;

F.4 Taxes for new judgments;

F.5 Special appropriations necessary on an emergency basis.

B. The point in time to use for the proper calculation of
allowable property tax mill rates, for all taxing jurisdictions, shall be the next tax
rolls as certified by the borough assessor on July 1st of each year.

This specific point in time shall be utilized for both the
figures in the prior year and the current year.

C. As used in FNSB 3.08.141 and 3.08.142, the following
definitions apply:

1. "Voter-approved services" includes but is not
limited to:

a. A service specifically authorized by the voters of a taxing
jurisdiction in any ballot issue,

b. Programs directly related to voter-approved capital projects
which are in addition to services in the current fiscal year budget,

c. Services added by the creation or alteration of the
boundaries of a taxing jurisdiction if the creation or alteration of the boundaries of
said taxing jurisdiction were approved by the voters of said taxing jurisdiction. Taxes
required to provide a "voter-approved service" are the estimated first full-year
costs of voter-approved services less revenue other than taxes projected to be generated
from the voter-approved services, for the number of months in the next fiscal year for
which the voter-approved service will be provided;

2. "Current fiscal year' is the fiscal year during which
the next fiscal year budget is prepared;

3. "Emergency" is the imminent threat of or the
occurrence of widespread damage, injury, or loss of life resulting from any natural or
man-made cause, including, but not limited to fire, explosion, flood, earthquake,
landslide, mud slide, volcanic activity, avalanche, weather conditions, epidemic,
blight, infestation, riot, loss of public utilities, shortage of food, water,
fuel or clothing, or the accidental release or discharge of toxic substances
or hazardous substances. "Emergency" does not include appropriations for
the normal operations of a service area or the Department of Health and
Safety;

4. "Fiscal year' means the fiscal year (July 1st through
June 30th) for the Fairbanks North Star Borough;

5. "New construction or property improvements" means
any improvement which generates a taxable value not on the tax roll for the current
assessment year, including but not limited to:

a. Construction which increases the value of the property,

b. Any change in the status of land;

6. "New judgment' means the judgment reserved sufficient to
cover the total cost of all judgments and arbitration awards during the next fiscal
year, including:

a. Principal, interests, fees and costs,

b. Additional services which may be required by a court
order;

7. "Next fiscal year" is the fiscal year following the
current fiscal year and for which the new budget is being prepared;

8. "Prior fiscal
year" is the fiscal year immediately preceding the current fiscal year;

9. "Taxing jurisdiction" means a taxing unit of the
Fairbanks North Star Borough. A service area is a taxing jurisdiction.

Section 4. Effective date. This ordinance shall be
effective on certification of the election.

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